Asian liquefied natural gas prices spiked to multi‑year highs after the Iran war choked the Strait of Hormuz and disrupted Qatar’s exports, sending a shock through global energy markets.
Story Highlights
- Spot prices in Asia soared, peaking near $25 per unit in March during the worst disruption.
- The Strait of Hormuz disruption sidelined close to one‑fifth of global liquefied natural gas supply.
- Analysts and agencies tied the surge to war damage and shipping shutdown risks centered on Qatar.
- Prices stayed well above pre‑war levels into June, showing the shock’s staying power.
War Disruption Drives A Sudden Price Spike
Reuters reported that Asia spot liquefied natural gas prices jumped 143% from late February and reached about $25.30 per million British thermal units in March, the highest since late 2022 by that measure. The outlet tied the surge to Iran war damage in Qatar and the resulting scramble for supply. A separate Reuters report described a one‑day jump of nearly 40% as Qatar halted output, with more than 80% of its shipments normally bound for Asia.
The International Energy Agency said the near closure of the Strait of Hormuz removed almost 20% of global liquefied natural gas supply, causing sharp volatility and driving Asian and European spot benchmarks to their highest monthly averages since January 2023. Wood Mackenzie said the closure created a major supply shock for Northeast Asia and pushed spot prices above $20 per unit in early March as buyers paid a war risk premium and hurried to secure cargoes.
Qatar’s Central Role And The Chokepoint Effect
Qatar is a top liquefied natural gas exporter, and its cargoes usually pass through the Strait of Hormuz. When fighting and damage hit operations and shipping lanes, supply to Asia tightened fast. CNBC reported that Iranian forces effectively closed the strait to ships, and global gas prices jumped on fears of a long shutdown. The World Bank also linked strait disruptions and damage at Qatar’s Ras Laffan complex to sharp price increases across Asia and Europe.
Market reports show the worst of the price shock landed in March. Reuters later noted that prices peaked around $25.30 after strikes near Qatar’s Ras Laffan site, then eased but stayed elevated. By early June, Asia prices were still roughly $18.20 per unit, about 75% above pre‑war levels, signaling persistent tightness even as trade routes adjusted. That pattern fits past energy shocks where chokepoint risk drives immediate spikes, then partial rebalancing.
Knock‑On Effects For Buyers And Power Markets
Asia’s heavy reliance on Qatari supply left importers exposed. Reuters reported some buyers pivoted toward coal as liquefied natural gas cargoes became scarce and costly, a move that raises power sector emissions and grid costs. A separate Reuters analysis said Asia’s demand later recovered as China returned to the spot market, but prices remained higher than before the war, keeping pressure on utilities and industry budgets. Those shifts show how fast one chokepoint can change fuel choices.
For American readers, the link is simple: global gas prices feed into electricity, fertilizer, and shipping costs. Even when the United States has ample natural gas, world prices can move equipment, parts, and goods costs higher. The recent shock reminds us that secure sea lanes, steady supply, and a strong deterrent posture matter. Policy that expands domestic energy, speeds permits, and hardens critical routes protects families from foreign chaos turning into higher bills at home.
Sources:
zerohedge.com, reuters.com, bloomberg.com, energyconnects.com
